CHANCELLOR Gordon Brown's growth forecasts appeared far too optimistic yesterday as new figures showed the UK economy almost fell into recession at the start of the year.
The Office for National Statistics said gross domestic product (GDP) in the first quarter was "broadly unchanged" from the final three months of last year, making it the second successive quarter of zero growth.
Previous estimates put growth at 0.1 per cent and City experts immediately lowered their GDP forecasts for this year.
The Chancellor predicted growth of between two and 2.5 per cent for 2002 in last month's Budget, but Philip Shaw, chief economist at Investec, said he now believed the economy would grow by just 1.4 per cent.
He said: "Mr Brown's forecast now not only looks ambitious but unachievable. The economy needs to expand by 1.1 per cent per quarter over the remainder of the year to hit the lower end of his range."
A downturn in the finance and business services sector was blamed for the revision of the first quarter figures, although the ONS said manufacturing output was also weaker than estimated.
Annual GDP growth remained unchanged at one per cent, but this is the weakest level since 1992 when the UK was struggling to shake off its worst post-war recession.
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